Monday, January 21, 2008

It was with some dismay that I read this morning that New York Senator Charles Schumer is proposing that the economic stimulus package being considered in the hallowed halls of our Congress include a rebate for those who paid payroll taxes but not income taxes last year. Apparently, Mr. Schumer did not read my post yesterday about the folly of making tax rebates that will add to our national debt.

As you must know from what I have written in the past I am a Democrat. (Before you start throwing stones, please realize that my political preference is not entirely my fault. How can I be anything but a Democrat when the bottle with which my mother fed me had a photograph of Franklin Roosevelt on it?) It is always easier for me to attack politicians of the other persuasion, so it is not with a sense of glee that I pick on the senior senator from the Empire State. It requires me to admit that not all the irresponsible politicians in America are Republicans.

As I pointed out yesterday, to get the money to make any tax rebates the Government is going to have to borrow. (I have been in the “Cash Room” in the Treasury building in Washington and let me assure you that it is quite empty.) And, since for every dollar our government borrows now some poor sucker in 2050 or 2060 is gonna have to pay an extra dollar in taxes to pay off the debt, what we call a “tax rebate” for us is really a tax increase for our children or grandchildren. Not only is transferring our tax burden to a future generation irresponsible, it’s down right immoral. As Thomas Jefferson said to James Madison in 1789,

"Then I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and incumbrances of the first, the third of the second, and so on. For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation. Then, no generation can contract debts greater than may be paid during the course of its own existence."

(I sure hope somebody pays attention to my postings soon because I am running out of Jefferson quotes on the public debt.)

I, like Senator Schumer, am a believer in social justice. I feel strongly that those already wealthy should not get richer on the backs of the poor. It’s hard to argue with Mr. Schumer’s conclusion that it is grossly unfair to make rebates to middle class taxpayers but not to the working poor. However, Chuck Schumer is sort of mixing apples and oranges.

The economic stimulus package proposed by the Administration would be a rebate of income taxes paid (I assume in 2007). Although the cash to make those rebates would have to be borrowed, from an accounting prospective the payments would come from the General Fund of the Treasury. If Mr. Schumer wants to also make rebates of payroll taxes paid last year he is not talking about making payments from the General Fund of the Treasury but from the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund (commonly referred to together as the Social Security Trust Fund). We all know that the Social Security Trust Fund does not have a rosy future. With the increase in retirees and the decrease in working slobs paying payroll taxes the trust fund will go belly up during the life times of those already born. Mr. Schumer’s proposal, although it will probably cost only a few billion dollars, will bring the date of Social Security insolvency a little bit closer.

What Chuck Schumer and other politicians in Washington have to learn is that there ain’t no such thing as a free lunch. Every dollar we spend today that is not covered by current revenue is going to have to be paid in the future by our children or grandchildren. Let’s make this personal to Senator Schumer. Each yearly deficit that you create with your votes now will require your daughters Jessica and Allison (and their own children yet unborn) to pay increased taxes in the future. I ask you, Chuck, is this social justice?